An hidden danger in Australian real estate

In the next 4 years there will be AUD60bn of interest only loan to be refinanced.

Due to the more stringent rules for the bank capital most oif them will have to be transformed into capital and interest – increasing the cost for the real estate investor and decreasing the tax deduction.

Moreover, there is an estimated 20% of “liar loans” (where people declared financial positions different from the reality and the banks closed their eyes).

This fact will add a new downward pressure on real estate and on consumer spending (higher loan repayment- less money to spend).

A little policy mishap could really spell the end of the Australian real estate fantasy (that houses are the only secure investment).